What is bill discounting?

Bill discounting, or invoice discounting , is the act of sourcing working capital from future payables. Furthermore, the seller recovers a number of sales from the financial intermediaries before the due date.

What is invoice factoring?

Invoice factoring involves a third party which is placed between the buyer and the supplier. The third party – who is the factor in this scenario – purchases a company’s accounts receivables (unpaid invoices) at a discounted rate.

What is the difference between bill discounting and invoice factoring?

While the concepts are largely similar, the main difference lies in which party takes the liability of the sales ledger and which one claims the responsibility of collecting payment .

What are the advantages of bill discounting?

Invoice financing has many benefits for small and medium-sized businesses, the main being a material improvement in the business's access to liquid cash.

Bill Discounting versus Invoice Factoring | Trade Finance Global

Articles

Bill discounting vs. invoice factoring – what’s the difference?

By Gabrielle Vilda

Gabrielle Ann Vilda is an author at Trade Finance Global

Last updated on 12 Dec 2022

12 Oct 2022 4 min reading time

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